Tesla’s new ‘more affordable models’ have been released, and they’re stripped-down versions of the Model 3 and Model Y. They’re currently the cheapest cars in Tesla’s lineup at base price of $37k and $40k.

But that price is actually more expensive than the cars were a week ago in the US, due to the expiration of the US federal EV tax credit which Tesla CEO Elon Musk pushed for.

For many years, Tesla had planned to build a much more affordable vehicle, starting around $25k. This vehicle was nicknamed the “Model 2,” and would have offered the most affordable entry point into the EV market, at least in the West.

But that project was abruptly canceled by Tesla CEO Elon Musk as first reported by Reuters and immediately denied by Musk. Reuters was later shown to be correct in its report.

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In its place, Tesla started offering vague promises about “more affordable models,” starting in its Q1 report in April 2024. Tesla later specified that these would enter production in the first half of 2025.

The language Tesla used suggested that the cheaper vehicles would be new models, which means more than one model, and not just based on a current Tesla model. But we reported that this was unlikely to be the case, and that the new models would just be a stripped-down Model Y. However, today we’re learning that the Model 3 is getting an update too.

The first-half deadline Tesla set came and went, but after some leaks this week, now we’re finally seeing the result of these years of promises, and they’re… actually more expensive than the car was when all those promises were made.

Tesla starts selling new “standard” Model 3 and Model Y

Tesla’s configurator is now live with all the juicy details of the new “standard” more affordable Model 3 and Model Y. The photos below show the standard trim on the left, premium on right.

The new trim levels come with several changes, many of which we’ve reported before, including no front or rear light bar, new 18″ wheels, a modified console, fewer speakers, no ambient lighting, no rear screen, and less range and acceleration due to a smaller 69kWh battery. They’re also only available in monochrome colors – grey for free, white for an additional $1k, and black for an additional $1.5k.

Here’s a full list of the changed features, from Tesla’s “compare” function on its site. This is the Model Y comparison, but the Model 3 feature deletions look similar (the Model 3 still has a glass roof in standard trim, though Model Y has a covered-up glass roof for some reason):

It’s a lot of significant changes, with seemingly almost every feature in the cars being downgraded in some way.

The standard trim does still have the same number of phone chargers and USB outlets, power recline seats, door pocket and footwell lighting, a hands-free trunk, and all the same active safety features.

They also have the same software and charging features, two areas where Tesla shines (though slightly reduced Supercharging speed due to the smaller battery).

The new standard trim can purchase access to Tesla’s Full Self-Driving (Supervised) system, like the other trims can. It does not, however, have “autosteer” as a default feature (though Tesla says “features subject to change” under this heading).

Many of the missing features are new features which were added with the “Highland” and “Juniper” refreshes of the Model 3 and Y respectively. Those have been thrown to the wayside, putting us back to where we started before the refreshes in many respects – except in some ways we are even further back, as a few other features like power folding side mirrors that were present on the original Model 3 are now nowhere to be seen.

Go ahead and run down the list and see what features have changed, and which ones might be important to you.

A “more affordable model” that’s actually more expensive

And the new trim levels are indeed more affordable than yesterday’s base models, which Tesla is now calling “premium” trim. Premium starts at $45k for the Model Y and $42.5k for the Model 3, as they did yesterday, but the new standard models start at $40k and $37k respectively, which are a nice chunk of change cheaper.

However, Tesla vehicles got a $7,500 effective price hike just one week ago, when the federal US EV tax credit was taken away by republicans. Incidentally, Tesla CEO Elon Musk spent $200 million in political bribes to help make that happen, thus increasing the price of his company’s vehicles, and in fact making the “more affordable” Model Y actually less affordable than it was just last week.

Prior to last week, the “premium” Model Y would have cost $37,490 after tax credits, which were available as an upfront price reduction due to President Biden’s Inflation Reduction Act. Now, the “standard” Model Y starts at $39,990, which is a $2,500 higher number than last week’s price. Same deal for the Model 3, which was $34,990 after tax credits last week, but $36,990 today, a $2k increase (making the standard Model 3 a slightly less-bad deal than the standard Model Y).

This is the new lowest base price we’ve seen on a Tesla before, if you ignore tax credits. The Model 3 has been available for as low as $39k, so it’s now $2k cheaper than that (unless you count the questionably-briefly-available $35k off-menu Model 3 which also didn’t have access to tax credits). And the Model Y has been as cheap as $43,990 before tax credits, so it’s lower than that too – but only if you ignore the credits, which makes it more expensive in the end for most buyers, and especially those who that extra few thousand matters for.

Electrek’s Take

We’ve been talking in Electrek’s chat channel all week about what we thought the price of this would be, and what our reaction would be at various price levels. Although we’ve mainly been talking about the Model Y, because that’s the one that we saw so many leaks of – the inclusion of the Model 3 in today’s changes is actually a pleasant surprise.

We thought $40k for the Model Y wouldn’t make any sense – there’s just too much stuff missing from the new trim to justify only a $5k price drop, and given tax credit expiration, it’s not even any better. And the $5.5k price drop of the Model 3 fits in a similar basket as that.

Even at a $7.5k price drop, it would have been the same price as last week when taking credits into account – so you’re just losing a huge amount of features for the same price. But, Tesla could have claimed it wasn’t their fault (even though it is), and they’re just doing the best they can do to give the market the same car at the same price.

We generally agreed that a $10k drop would be the bare minimum to be actually impressive, and figured it might be possible given the amount of features cut. But I still thought a $5k cut would be most likely, based on leaks we’ve seen.

So, here we are, sure enough it’s $5k less than last week, and more expensive when you take account tax credits, and everyone can be disappointed. Especially when taking into account the original target of $25k for Tesla’s “more affordable models.”

As to whether this will be successful at reversing Tesla’s current plummeting global sales in an otherwise rising EV market, we’ll have to wait and see. If this cheaper Model 3 and Y make it to other territories which didn’t just lose tax credits (and it reportedly will come to Europe soon), there it will represent actual savings and might get a few more converts, at least from the people who can look past the company’s bad CEO. That said, Tesla tried something similar with a stripped-down Cybertruck, but that didn’t work as it got discontinued in a matter of months.

Going forward, it is still a slightly cheaper way to get into a Tesla – but it’s hard to see how this compares favorably to an Equinox or Ioniq 5 at $35k. Or either of the upcoming Chevy Bolt EV, which we’ll be at the unveiling of tomorrow and expect to be priced under $30k, or the new Nissan Leaf EV which has already been announced at under $30k, with an upcoming entry-level trim which will be even cheaper.

Nevertheless, if this price drop (increase?) is enough to get you into a Tesla and you’re one of the ones who can look past its bad CEO (I’m not), feel free to use our Tesla referral code for a 3 month trial of full self-driving.

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